INBS 'advanced billions without proper scrutiny'

'Details of the vast amounts funnelled through the organisation's UK office emerged yesterday at the Central Bank's inquiry into alleged regulatory breaches at Irish Nationwide Building Society (INBS)'

The Belfast branch of Irish Nationwide Building Society advanced billions of pounds to developers and property investors at the height of the boom without any proper scrutiny by the now-defunct lender's credit committee.

The Belfast branch of Irish Nationwide Building Society advanced billions of pounds to developers and property investors at the height of the boom without any proper scrutiny by the now-defunct lender's credit committee.

Details of the vast amounts funnelled through the organisation's UK office emerged yesterday at the Central Bank's inquiry into alleged regulatory breaches at Irish Nationwide Building Society (INBS).

Tom McMenamin, the society's former head of commercial lending and de facto chair of the credit committee, confirmed the funds - which financed a variety of enterprises, including a luxury spa hotel in Paris and a residential care home for the elderly in Germany - received "little" or "no discussion" by the credit committee. In his third day of evidence, Mr McMenanim admitted to Brian O'Moore, SC - a member of the Legal Practitioner Team assisting the inquiry - that the Belfast-originated loans were discussed between the head of UK lending, Gary McCollum, who was based in the city, and Michael Fingleton, INBS's former managing director.

The one-time senior executive said he was usually handed a note listing the UK arm's loan recommendations and was instructed by Mr Fingleton to "liaise with Gary". The loan applications were recorded in the committee's minutes, despite the "lack of discussion", and then recommended to the society's board for approval.

"So the note was not 'please discuss extensively with the credit committee to see whether the loans should be recommended'?" Mr O'Moore asked. "No," Mr McMenamin replied.

The inquiry then took a fresh turn when Mr McMenamin, under intense questioning from Mr O'Moore, was unable to recall who prepared and circulated agendas for the credit committee - documents that helped underpin reassurances given to the regulator and the auditors that members were complying with the committee's terms of reference.

"I am not absolutely certain that agendas were circulated," Mr McMenamin said, before admitting he could "not recall" who decided what should even be included on the agenda.

"That is a really strange state of affairs, isn't it?" Mr O'Moore observed. He argued Mr McMenamin ostensibly had responsibility for the committee agendas but said previous evidence given to the inquiry showed "no one remembers getting it and it lists items for discussion that were never discussed".

In his cross-examination of his former employee, Mr Fingleton, representing himself at the inquiry, said loan applications were advanced to the credit committee only if they were likely to be approved and said that might explain why "so few applications were declined".

He argued the society carefully monitored the market and highlighted that the Central Bank gave regular upbeat assessments. These "would have rubbed off on the commercial department" and "would have rubbed off on you?" he asked. "Yes," Mr McMenamin replied.

The prominent ex-banker also noted that it was a relief Mr O'Moore had not asked Mr McMenamin whether his use of the word "boss" was a "term of affection". "A term of endearment," Mr McMenamin said.